In the short-term rental riches will discuss investing in real estate with a specific focus on short term rentals quick action items to wire. Scale your portfolio I’m your host Tim Hubbard.

Welcome back to the short-term rental riches podcast here we are another week and another topic related to real estate as always but again this time in a sort of round about way this is gonna help us with our due diligence when we’re looking for properties but also it’s just some basic things that we want to consider and to take into account when were sharing information about maybe a potential market or maybe a potential property or maybe a potential real estate investor that has an offering we’re talking about stats this week and numbers and whether we should believe all this a lot of it comes from the news a lot of it comes from email offerings that we see or property reports maybe one of the more valuable classes I had when I was doing my MBA was a class where all we did was break down news to find out where their faults were it was like a critical thinking class critical analysis class of information and stats there we were exposed to just in day to day life and it really helps me to think about information that I see differently so we’re gonna go over a couple examples just commenting samples I’m sure you’ve seen on product labels that you probably want to think twice about her or think wow that sounds really good we’ll talk about that this constant wave of news and how that’s kind of changed how we can more effectively evaluate data so we know maybe if it’s a pro forma for property if it actually makes sense and we’re gonna talk about what the heck is a pro forma it’s something I worked with a lot when I was a broker and really any. The commercial property 5 or more units or apartment building shopping center any sort of commercial property you’re almost always going to see a pro forma so we’ll talk about that and also some signs to keep an eye out on that could mean the data you’re seen as that is not that good so let’s just jump right in I’m sure you guys remember seen Colgate for example you go to the store and you buy a box to be toothpaste and it says 80 percent of dentists recommend Colgate. Also I really like credible info that sounds good right all while you know most most innocent this is great toothpaste well what if those Dennis also recommended to other toothpaste options which they did in this example Colgate got sued for that because that that data meant nothing they could have recommended 5 option means all the same way so it it doesn’t really mean anything you might have seen back in the day Reebok came out with a shoe that was Reebok said that these new shoes would tone your hamstrings and calves up to 11 percent harder than traditional shoes and tone your **** up to 28 percent more than normal authentic shoes that’s a bunch of a bunch of baloney do and they got sued for that one so we see this stuff all of the time it especially with the massive amount of news and information that comes in a lot of times we don’t think twice about it you know there’s been tons of statistics going around with code and I don’t want to downplay code anyway but some of the statistics we gotta think about for example of you know let’s say the city has been doing really well they didn’t have any cases smaller city maybe only has like you know 5000 people in it and then one person gets coded and 6 months later 5 people have coated wall a news article come out and say. Cases of Covidien someone so city increase 500 percent because I went from 1 to 5 right 500 percent increase well if we don’t have any more info about that news article or that city or if we don’t know what that sample sizes then we’re going to be somewhat shocked right we have to be really careful when we see percentage increases and and news data or in property evaluations or whatever it is we need to know what it’s increasing from if we don’t know the sample size the percentages can be very misleading I was reading a book earlier this year called anti fragile by not seen to lab I think hopefully pronounce his last name right but he’s talking about how news used to inform us about important things when something happened it showed up and so wasn’t always you know a 1 page article about so and so sometimes it was you know 100 words so and so happened nor this changed but for news companies to survive today in 2020 or whenever you’re listening to this in real time they need a constant flow of news it doesn’t change so even if they don’t have something credible well a lot of it unfortunately is going to be kind of filler right or they’re going to regurgitate something they saw it somewhere else so the amount of information coming at us is just increasing exponentially and we just want to double check that DM so we’re hearing it is credible. And there’s a few ways we can do that or at least some things that we can look out for first of all what we need to know who’s writing the article who’s publishing the info or if this is a real estate investment who is the company that’s providing the data and where’s it coming from so that would be the authority of the article we also need to know when it was dated you know we might see some information about a market a real estate market maybe it’s a year old but they don’t have the date on there so that’s something really important really easy that we want to be conscious of and what is the purpose of the news article or the evaluation on the property well if it’s a property and they’re selling it most the time the purpose is to catch you to buy it right or to get someone interested in the property so that they can sell it that is their purpose a lot of news articles or documentaries their purpose is to persuade you that one way of thinking is right versus the other or one product better than the other and so their data might be a little biased so we want to check the authority whose writing then who created the content the date what the purpose was and then also the coverage if we bring this back to a real estate investment and they’re talking about a particular city for example or maybe they’re talking about a neighborhood that’s doing really well but it’s in the overall city that’s not doing well so is this data or is this article or is this evaluation that were seen as a given us an accurate picture of the whole idea just another thing that we want to consider now this next one man people are getting really good at and that’s presentation so we get data Instagram you 2 people may. I can amazing videos now we are on you too by the way I say I I would like to say that our videos are amazing but we’re I’m really at this point just recording the podcast and were put on there so it’s another Avenue to great Avenue for learning and people are getting really good at their you tube videos the presentation is really important and it can really sway us to I mean if there’s a lot of visual aids and if there’s a lot of pictures and things like that or seen it really quickly it can lead us to believe one thing that might not be completely accurate we can’t spend our whole lifetimes trying to analyze data and do all these things but if we just consider these simple things it can help us. Where intermission thank you so much for listen in the podcast it’s been fun for me and I look forward to getting up so it’s out if you have a specific topic that you’d like us to talk about send us a comment and let us know you can send it to contact at rest methods.com and if you haven’t already subscribed and given us a review that would be greatly appreciated too and lastly if you know someone that you think would find benefit in this as well send it on over to help us keep growing and help us to get amazing content back to you without further ado let’s jump back into. A few other things that might be given us misleading statistics could just be you know faulty polling if someone’s producing a report let’s say on the short term rental industry and they’re producing statistics about vacation rentals but they pull inner city short term rentals for data well then that’s not gonna match up there but the polling the wrong crowd that’s 1 thing that could lead to bad data also false correlations if we use that same example again the data for vacation rentals is often very different than urban short term rentals and if we take data from urban Runnels and say that it’s causing this the facts with vacation rentals with that’s a faulty correlation and that’s that’s not gonna help us out either especially for looking for new markets and stuff like that and then sometimes you know when someone does report they can purposely seek out a certain group to get the data that they want or biased data we could say so now let’s let’s break this down more on a real state basis I want to get to the pro forma and just how sometimes these are faulty and I know firsthand because I worked as a broker selling commercial properties and then every person that came to buy 1 of our properties asked for pro forma because the lenders are going to ask for pro forma it is a projection of what that property can actually do but it’s not what the property is actually doing so more value in property we want to get the actuals we want to know exactly how much rain came in exactly how much utilities costs and then we could compare that with what they could hypothetically do and that’s what we’ll find in the pro forma so if you’re doing a renovation on a property and you change it you know you’re expecting to raise the rents 1020 percent well then that could go in the profile. Warm and that’s what you could give to a lender now the lender’s gonna wanna see actuals also but I remember doing these deals you know and depending on the year were in and how the general real estate market’s doing or specific to our our neighborhood or a local market there are certain expectations investors have a lot of times people use it a cap rate it’s a measure of evaluating a property and you know back in the day back in my car after the 809 crash 78 percent Capri maybe it was it was pretty common you know you’re getting a much better return on properties because the properties 1 is expensive now a 4 or 5 cap could be good in some markets and so when brokers or real estate agencies are preparing these pro formas they know what the market is expecting so even if a property is not performing at a 5 percent cap rate per se maybe they lowered the utility costs maybe they raise the rents a little bit on the pro forma to get them to that number where they want to be and that’s exactly how it works with the pro forma so do not base your purchase decision offer pro forma it’s not real data it’s hypothetical I looked up the definition of pro format and in Latin it literally means for the sake of form basically it sets of filament spots it to have it filled out a hypothetical projections so don’t base your investment decisions offer pro forma now on the flip side pro forma is helpful for us to evaluate what it could do but we want to base that offer real data you know if we have a good pro forma excel sheet war you know there’s lots of rental calculators online I’m sure you could find for free having that. Template is good because we can fill in those numbers and we can run some hypotheticals I would always take a conservative hypothetical with your pro forma and then perhaps one you know if everything went as planned and then maybe assume that it’s going to fall or your projections or the actual returns that property are gonna fall somewhere in the middle right so different different podcasts today I just want to break it down you know when I hear data I’m thinking about it in the better your with your math skills too you can catch a lot of these things you know sometimes people tell me something and I’m like wait a minute that doesn’t you know any kind of crunch the numbers in your head a little bit you know like that doesn’t make any sense you know so so double check these numbers that you’re hearing if it’s a news article or whatever it is ask yourself whose authority here who’s writing this creating this content what date was this content created what’s the purpose of this news article I’m seen or this pro forma who’s it directed at and what’s the real purpose behind all this what’s the coverage are they really including all the necessary pieces in this data that they should be to give us an accurate picture of it how does it presented are they doing an excellent job on YouTube with visualize ation to maybe sway us or convince us of something that’s maybe not true are there Instagram images and stats amazing just just double check the presentation sometimes that can sway us especially for not actually listening to what’s being said behind the visual side of it so consider those things and if you’re looking for properties of a pro forma just double check that you know the actuals hope you guys are all doing well out there and have a wonderful day. So we just had our live virtual fan and I gotta say it was a blast as always we done to live events before and this was basically a replica except for we got to attend from the comfort of our own homes and the beautiful thing about doing a weapon or is it was easy to record so if you missed it jump over to rest methods.com forward slash virtual and you can get your copy we jam packed it full to the brim everything that I’ve found to be the most important setting up your short term rentals and making sure you’re earning maximum revenue in the highest occupancy but all while not giving up all of your time in creating passive systems so I give you all my resources we go over my actual properties case studies with pre and post code numbers and in my outlook in the future I think there’s a ton of opportunity so if you guys are just getting started or you have several properties already there’s no need to reinvent the wheel get all my tips and tricks things that I’ve learned and save yourself the headache and frustration just head over to rest message star forward slash virtual I know you’ll find a ton of value in it enjoy.

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